Profit margin at Alibaba, which is planning an IPO, has been accelerating rapidly and reached nearly 50% in the first quarter of this year, while revenue was up 71% year over year and profit rose by 200%.

Investors have long bet big on Yahoo because of its Asian assets, which also include a stake in Yahoo Japan, though that company has seen sluggish growth.

One analyst, Jordan Rohan of Stifel Nicolaus, said the fact that Yahoo’s shares dropped immediately following after the earnings announcement — which didn’t highlight the Alibaba figures — “gave investors a head fake,” he said.

But the main reason for the lag in enthusiasm for Yahoo’s stock came from the fact that analysts like himself, before raising their price targets, had to spend time to project the expected value Alibaba in the coming years based on its growth trajectory and exactly how much it would impact the value of Yahoo’s stake.

Based on Rohan’s calculations, the rising Alibaba financials should add $3 to Yahoo’s share price, more than offsetting the lower-than-expected performance of Yahoo’s core business.